Icy conditions building from the Midcontinent and Texas through the Southeast and heavy snowfalls predicted in the Northeast and Midwest failed to revive most of the cash market Thursday. Only Northeast citygates, where spikes were most often in triple digits, got a significant boost from the new blast of arctic cold enveloping most of North America.
The expiration-day loss of 21.1 cents by February futures a day earlier and the fact that Thursday’s deals encompassed the weekend period (due to Feb. 1 falling on Monday) undoubtedly had a lot to do with most cash points failing to respond positively to the return of frigid weather.
A large majority of the market recorded drops ranging from about a nickel to a quarter or so (CenterPoint-East was flat). Dominion, Transco Zone 5, Leidy Hub and Iroquois, Waddington joined Northeast deliveries in realizing gains of about a nickel to nearly $4.10. Transco Zone 6-New York handily exceeded all other locations in racking up the largest gain.
Expectations varied even more widely than usual for the storage withdrawal during the week ending Jan. 22, but the Energy Information Administration was well below consensus estimates on either side of 100 Bcf in reporting a pull of 86 Bcf. March futures fell 8.6 cents in their first day as prompt-month contract (see related story).
Conditions were so cold and icy in the Midcontinent that the American Association of Petroleum Geologists in Tulsa posted this website message: “Due to extreme winter weather the AAPG HQ [headquarters] office is closed. It is anticipated HQ will resume normal operations on Monday.”
That wasn’t all. “It’s bad here,” said a Midcontinent producer who reported about half an inch of ice from Oklahoma City through Tulsa, with more sleet on the way followed by snow. “We’re still open,” he said, but Oklahoma City-based producers Chesapeake, Devon and Chaparral had also closed down Thursday and were expected to stay closed Friday. “Guess us private mantelpieces ‘gotta’ keep those doors open longer!” he laughed.
The producer said he thought prices were down chiefly due to a milder eight- to 14-day forecast, “and now there’s the weak EIA [storage] number today.” He expected Midcontinent prices to probably test the $5 level next week, although he thought regional prices should have been stronger for the weekend due to some wellhead freeze-offs (but no OFOs had been issued “yet” by Oklahoma intrastates) and because practically “no one was around to trade!” Power outages were starting to surface in the Midcontinent Thursday, he added.
Although it did not issue an OFO, PG&E projected that California Gas Transmission system linepack would exceed maximum target levels Saturday and Sunday.
The Florida citygate saw one of the smallest drops as Florida Gas Transmission continued to warn of a potential Overage Alert Day.
After having earlier predicted below-normal temperatures throughout most of the U.S. during the Feb. 1-5 workweek (see Daily GPI, Jan. 27), the National Weather Service (NWS) sees a drastic reduction in them after the middle of next week. In its six- to 10-day forecast posted Thursday afternoon for the Feb. 3-7 period, NWS said it expects below-normal readings only in the Four Corners area of the Southwest. It expects above-normal conditions most of the Northeast and Midwest, Washington state and northern Idaho, and in a horizontal swath from central Texas to the western edge of Georgia.
A Midwest utility buyer said it was super-cold with sub-zero lows, but at least “the main streets are clear of ice.” It’s been worse, she said, getting down to 17 below earlier in January, so a forecast of minus 5 for Friday is “relatively” warmer.
The buyer said she suspected that the continuing softness of most prices was because the new blast of cold is going to last only a few days, and there’s still plenty of storage. The weekend factor also played a part, she said. She held back on buying new spot gas, saying local conditions should be getting warmer toward the end of the weekend, so her company will try to make it through with storage as much as possible.
Her utility picked up very little baseload gas for February since it has some year-round prepaid deals already contributing supply. It paid index plus 0.25 cent at Northern Natural-demarc, she said. She reported hearing from trading counterparts that bidweek business had dwindled to almost nothing Thursday.
Demand for liquefied natural gas supplies is now seen as competing with increasing use of storage as the last two months of the traditional withdrawal season approach with still-abundant inventories on hand. North America is believed to have weathered the coldest portion of the 2090-10 winter with milder temperatures expected during most of February.
The Elba Island facility in Georgia was representative of the low capacity utilizations at most North American terminals. As of Wednesday only 232,650 MMBtu of withdrawals were scheduled out of a total capacity of 952,593 MMBtu, reported operator Southern LNG, leaving 719,943 MMBtu available.
Kern River said it is continuing work on its 2010 Expansion Project but does not anticipate that the capacity will become available during February.
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